Reasons for Proposal
As global warming gets worse, countries around the world are actively seeking greenhouse gas reduction policies to aim for “carbon neutrality,” which reduces greenhouse gas emissions to zero (0) by 2050. In Korea, the government and the National Assembly announced carbon neutrality in 2050 and are preparing effective greenhouse gas reduction policies.
Meanwhile, Korea legislated the Framework Act on Low Carbon, Green Growth in 2010, which stated the government’s ambitions, goals and obligations to tackle climate change and global greenhouse gas issues and operates a tax regime to reduce greenhouse gases under Article 30 of the same Act.
From 2010 to 2018, however, total greenhouse gas emissions in Korea have increased from 656.32 million tons to 727.6 million tons. This is because there are clear limitations, as Korea’s effective environmental tax rate is half the average of the OECD, and only some fossil fuels are taxed. To practically reduce greenhouse gas emissions, it is necessary to reorganize and reinforce the tax scheme in a way that fully covers those emitting carbon and imposes an appropriate tax rate on carbon emissions.
In this regard, this Act aims to establish a new carbon tax, an effective option to reduce and curb greenhouse gas emissions, minimize the burden for low-income groups and energy-vulnerable groups, increase the carbon tax rate flexibly in accordance with the country’s greenhouse gas reduction goals, realize carbon neutrality by 2050, and overcome the global climate crisis.
Details
A. Impose a carbon tax on energy resources, manufacturing raw materials, and transportation fuels that use fossil fuels that emit greenhouse gases such as gasoline, petroleum gas, and coal (Article 2, paragraphs 1 and 2).
B. Define the carbon tax base by multiplying the unit of greenhouse gas emissions (converted into tCO2-eq) emitted from goods by the quantity of goods (Article 6).
C. Define the carbon tax rate as 80,000 won per tCO2-eq and gradually increase it by 10,000 won from 40,000 won in 2021 to 80,000 won in 2025 (Article 7, paragraph 1, and Addendum Article 3).
D. Impose reporting obligations on those who manufacture taxable goods and allow a business entity with at least two work sites to report on the basis of a business entity (Articles 10 and 20).
E. Define release and export with outstanding tax as well as military supply, diplomatic, conditional or non-conditional tax exemptions to not collect carbon tax or exempt it (Articles 14 through 18).
F. Convert paid greenhouse gas permits and use them to pay the carbon tax in a method prescribed by Presidential Decree (Article 19, paragraph 3).
G. When a manufacturing operation is universally succeeded without transferring the manufacturing site, require the successor to succeed the predecessor’s rights and obligations (Article 23).
H. Allow the head of the competent local tax service or customs to issue an order required for carbon tax. Allow tax public officials to ask questions or conduct inspections required to investigate carbon tax and impose and collect administrative fines from those who violate an order to pay tax (Articles 24 through 27).
Notes
This Act rests on the premise that the Carbon Tax Dividends Act (Bill no. 8733) and the Partial Amendment to the National Finance Act (Bill no. 8734), represented and proposed by National Assembly member Yong Hye-in, are passed. If the bills are not passed or are passed with modifications, this Act must be adjusted accordingly.
